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Obama Administration in Damage Control over German Spying; Why Would U.S. Risk Damaging German Ties; Deadly Conflict Between Israel, Hamas Continues Boehner Vows to Move Ahead on Obama Lawsuit; Small Obstacle for London Wind Turbines.

Aired July 11, 2014 - 13:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)

ALINA MACHADO, CNN CORRESPONDENT (voice-over): (on camera): We wanted to see where those rafts were coming from and, just a few feet away, look at what we saw on the U.S. side. Several Border Patrol agents, two vehicles and four people who appeared to be detained.

(voice-over): Not long after, a bus shows up. Perhaps suggesting more than just four were now in the hands of U.S. Border Patrol.

(END VIDEOTAPE)

MACHADO: Locals describe the situation here as a constant battle of wit between Mexican smugglers and U.S. authorities. They tell us what we saw on the river yesterday, they see every single day -- Wolf?

WOLF BLITZER, CNN ANCHOR: Alina Machado, thanks very much. Excellent report.

Meanwhile, here in Jerusalem, nerves are on edge. Fighting between Israel and Hamas gets even deadlier. Can this conflict be dialed back? The possibilities and the challenges, the challenges of a truce. That's just ahead.

Also, spying on friends. Germany says it shouldn't be done and is taking direct action against the United States after the CIA allegedly spied on the German government. The rift and the possible remedy. All that coming up.

(COMMERCIAL BREAK)

BLITZER: Welcome back. I'm Wolf Blitzer, reporting today from Jerusalem.

We're following major developments. The Obama administration clearly in damage control after allegations surfaced that the United States is actively spying on its key ally Germany. The two cases involve Germans. One works for the country's intelligence agency, the other in Germany's ministry of defense. Both are reportedly suspected of handing over official governments (sic) to CIA officials. The Secretary of State John Kerry will undoubtedly try to smooth things over during a meeting this weekend with Germany's foreign minister. But Germany's anger is clearly palpable. It's expelled the CIA's top official in Berlin. That's a rare rebuke for such a close ally, but one Germany says was needed.

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FRANK-WALTER STEINMEIER, GERMAN FOREIGN MINISTER (through translation): The decision to ask the current representative of the U.S. intelligence services to leave Germany is the right decision, a necessary step and fitting reaction to the breach of trust which has occurred. Taking action was unavoidable, in my opinion. We need and expect a relationship based on trust.

(END VIDEO CLIP)

BLITZER: Our Frederik Pleitgen reports it threatens to damage a critical partnership for the United States.

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FREDERIK PLEITGEN, CNN CORRESPONDENT (voice-over): The topic was supposed to be bilateral relations between Germany and Moldova. Instead, the chancellor, Angela Merkel, fielding questions about the U.S. spying on her country.

ANGELA MERKEL, GERMAN CHANCELLOR (through translation): If what we hear right now is true, I have to say that from my point of view, spying on allies is a waste of energy in the end. We have so many problems and I think we should focus on the important things.

PLEITGEN: Diplomatic words, and Germany also quickly announced diplomatic consequences.

CLEMENT BINNINGER, CHAIRMAN, GERMAN PARLIAMENTARY CONTROL COMMITTEE (through translation): the federal government has asked U.S. Intelligence services, representative here in Germany, to leave the country. This is in response to a continuous lack of cooperation on investigations into a number of accusations.

PLEITGEN: The latest row could cause a major rift with one of the U.S.' most important allies. Germany is Europe's largest economy. Merkel supports Washington's position in the Ukraine crisis, and has been trying to negotiate a settlement with Putin. Germany is key in negotiations over Iran's nuclear program and various Middle East issues. Experts say damaged relations with Germany would be a big blow to the United States.

QUENTIN PEEL, SENIOR FELLOW, CHATHAM HOUSE: The Germans and Angela Merkel, in particular, they're the most important partners for America in Europe. This is the biggest economy clearly, but also, increasingly politically, the most important country. This whole row is really poisoning the relationship.

PLEITGEN: Relations with Germany are already suffering following the revelations of leaker, Edward Snowden, that the NSA had hacked Angela Merkel's phone. She's already under pressure at home. Many Germans want her to toughen her stance against the U.S. These latest allegations will make it even harder for Europe's most powerful politician to justify close ties with the Obama administration. Fred Pleitgen, CNN.

(END VIDEOTAPE)

BLITZER: The spy allegations have a lot of people asking why, why would the United States risk damaging ties with such a critically important ally.

Joining us from Irvine, California, Bob Baer, our CNN national security analyst, a former CIA operative.

Well, what's the answer? Why would the U.S. risk damaging a relationship with Germany, a NATO ally? What would be your answer?

BOB BAER, CNN NATIONAL SECURITY ANALYST & FORMER CIA OPERATIVE: Well, it goes back a couple decades when Iran, for instance, started relations with Iran (sic). Those were secret from us. There were German companies trading with Iran, nonproliferation issues were involved.

And, secondly, Wolf, we can't forget that 9/11 was hatched in Germany. The Germans failed to tell us about this cell in Hamburg. It came as a total surprise to us. And there's been an attitude at the CIA since that, you know, Germany has a large immigrant population, a lot of Muslim radicals, and that we need to look at it ourselves and the Germans aren't capable of it. That's the answer I can give.

BLITZER: The White House says the president was uninformed about this penetration that the U.S. was actually allegedly running a German spy inside German's intelligence services. Why would the CIA, if it's true, in fact -- we don't know if it's true -- why would the CIA keep that secret from the president of the United States?

BAER: I think it's a huge mistake. I mean, as soon as the Snowden revelations about Merkel's phone came out, they should have immediately gone to the president and explained to him, here's what else we're running in Germany, is this a problem, Mr. President. At that point, it could have been cut off, all sorts of remedies that could have occurred. This is a mistake by the CIA. When you're putting the president in jeopardy like this, you have to keep him informed.

BLITZER: How does the U.S. fix this now?

BAER: First of all, Wolf, this has never happened. At the worst times in our relations with Germany, never has a CIA station chief been expelled. So I can't begin to describe what a crisis this is in relations. I think the president's got to get a hold of Merkel and they have to sit down and work an agreement out. You could add Germany to the same agreement we have with Britain, no more spying. That would be the strongest remedy.

BLITZER: John Brennan, the CIA director, would you say he's in trouble? I assume he knew about this.

BAER: Well, he's not in trouble, because he didn't initiate this. This has been going on, spying in Germany, since, you know, the beginning of the Cold War, 1945, '46, so none of this is new. It's not like the CIA is acting in any sort of rogue manner. He's close to Brennan. I think he and Brennan should sit down and say, what do we really need to do in Germany, what sort of new agreement can we come to with Merkel and let's do it, and let's get the Germans to stand down on this.

Remember, they could have thrown the CIA chief out quietly. They chose not to. It's an indication of how angry they are and what a big political problem it is.

BLITZER: Yes, it's a huge, huge deal. I must say, when a NATO ally publicly expels the CIA station chief from the capital, that is a big, big deal.

All right, Bob, thanks very much.

Bob Baer helping us appreciate what's going on.

Still to come, the speaker of the House, John Boehner, reveals the issue that the House will try to sue the president over. The White House calls it a political stunt. We'll have a live report.

And the deadly conflict between Israel and Hamas raging on, could grow even larger. Can the U.S. play a real role in trying to restore some semblance of peace? We'll take a closer look at the difficulties and the potential opportunities.

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BLITZER: Israeli officials say Hamas militants fired more than 100 rockets at Israel today. The rockets clearly continuing. And an Israeli air strike hit a three-story apartment complex in Gaza. A 4- year-old Palestinian boy was killed. The death toll in Gaza this week has now passed 100. About 800 people have been injured in Gaza.

Joining us from Washington is Aaron David Miller. He's a Middle East expert, distinguished scholar at the Woodrow Wilson International Center. He spent many years at the State Department trying to achieve peace between Israelis and Palestinians.

Is there an end game? I keep asking this question. Do you see anything in the next few days that's going to stop the fighting?

AARON DAVID MILLER, DISTINGUISHED SCHOLAR, WOODROW WILSON INTERNATIONAL CENTER & MIDDLE EAST EXPERT: The '08/'09 offensive went on four three weeks. Operation Defensive Pillar in 2012 went on for a week. This is now on for four days, if you don't count the terror and violence in the West Bank. No, I don't see this ending quickly, Wolf, for a couple reasons. Number one, neither Israel, nor Hamas, is done yet. In diffusing a crisis, the rhythm and the ebb and flow, and the timing is everything. The Israelis have not yet satisfied themselves that they've done enough damage to Hamas infrastructure, particularly in the wake of the launch of those long-range missiles.

Hamas also needs a political victory. They're not just going to trade quiet for quiet. They want things. They want release of prisoners. They want Rafah opened. They want an easing of restrictions, again, what gets into Gaza and what gets out. So that's part of the problem.

The other problem is who's mediating? And the Egyptians, that's their traditional role. But Mr. Morsey, who did this in 2012, is in prison. And Abu Fatah Sisi, the head of the country, former military head, he wants to see Hamas weakened, so he's not in a hurry to jump in.

Then there's Washington. And the real question is, do we have enough leverage. We don't have contact with Hamas. We clearly have leverage over the Israelis but we're not going to press them hard until we get some indication Hamas is ready to stop. So, no, sadly, tragically, this is going to go on for a while longer.

BLITZER: You've seen this unfold many times over these past few decades. Here's the question. We know the president of the United States spoke by phone with the Israeli Prime Minister Benjamin Netanyahu. We don't know what they said. But take us into that conversation. What was the main message, do you think, President Obama gave the prime minister?

MILLER: Well, I suspect -- and this is usually part of the tenor of their calls. I don't think their relationship is terribly warm or close. I think the president kind of looks at the prime minister and he kind of doesn't believe he's respecting U.S. interests, and the prime minister looks at the president and says, you know, this guy really doesn't understand either my politics or the security predicament of my country. So I think Obama probably said, look, we understand you have a big problem here, you need to defend yourself, but be careful. Understand, and I know this from experience, my predecessor, getting into these things is a hell of a lot easier than getting out. We'd like to discourage a ground incursion. Give us some political time and space. The problem is, it's a compelling message. I think Netanyahu wants to climb down. The problem is I'm not entirely persuaded the other side wants to.

Again, who does the diplomacy? Hillary Clinton helped out in November of 2012. But, again, it was Mr. Morsey and the Egyptians driving the train. Right now, nobody's driving the train.

BLITZER: Yeah, I fear it's going to get worse in the coming days. We shall see.

Aaron Miller, as usual, thanks very much for you analysis.

MILLER: Wolf, stay safe.

BLITZER: Still to come, London's energy grid. But a small bird can keep the London array from becoming an even bigger player in the city's future.

Also, House Republicans vow to move ahead with a threatened lawsuit against President Obama by going after part of the Affordable Care Act. We'll go live to the White House and Capitol Hill.

(COMMERCIAL BREAK) BLITZER: House Speaker John Boehner vows to move ahead with a lawsuit against the president, claiming he overstepped his constitutional authority on Obamacare. The White House dismisses the threatened suit as simply a stunt.

Let's bring in our White House correspondent, Michelle Kosinski; and chief congressional correspondent, Dana Bash.

Dana, Republicans allege the president was out of line when he unilaterally delayed what's called the employer mandate provision until 2015, even though the House voted to do the very same thing. So what's the legal issue here, the basis of this lawsuit from Boehner's perspective?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: The basis is that the president did it on his own. Yes, the House voted to delay. But the whole point, if you listen to Republicans, is that this is a constitutional question, that the president unilaterally, decided to waive that employer mandate part of health care. However, the reality is that House Republicans have been calling the president the imperial president, things like that, for months and months. They have been looking at their legal options for months and months and months on everything from health care to the environment to immigration to foreign policy. And they settled on this particular issue, just one singular issue to sue him on. They say it's because this is their best bet legally. But, absolutely, I've talked to enough Republicans who pretty much admit that it's also the best issue that they have politically, because they say they're hearing it from the Republican constituents.

But the reality is also that Obamacare and fighting the President Obamacare really riles up the Republican base, and we're just a few months before a midterm election.

BLITZER: Michelle, lawsuits against this president, or any president, for that matter, rarely go anywhere. So is the White House expecting this lawsuit won't have any standing, will simply be tossed out?

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: As we expected, they're not really commenting on the legal ins and outs of it. But when I ask specifically, what is the White House stance, at least, on the potential merits of this case going forward, and the press secretary answered, that's assuming there is some merit to it. So I guess that was their answer to that. But on a more serious note, they said it will depend on the strategy that is used.

And remember this advisory group was assembled by house Republicans not that long ago in a precursor to trying to sue him when the administration decided not to enforce the Defense of Marriage Act anymore. They decided to not carry that lawsuit all the way through. Could be a different story here.

But the White House right now is saying, well, the White House stands behind the president's actions, the decisions made. And this is not going to stop the president from using his power and doing more to help the middle class going forward -- Wolf? BLITZER: Very quickly, Dana, the House has a Republican majority.

Could pass there. Does it need Senate authorization, as well, where the Democrats have the majority?

BASH: No. And because -- I mean, the reality is that House Republicans are authorizing this for largely symbolic reasons. They don't want this to be a John Boehner versus Barack Obama lawsuit. They want this to be a House of Representatives lawsuit, which is why they're doing legislation, having approval or authorization on the House floor before they sue. Technically, I don't believe they actually would really have to do that.

BLITZER: All right, Dana Bash, up on Capitol Hill, Michelle Kosinski, at the White House, thank you for that excellent reporting.

Straight ahead, plans to expand the London array offshore wind farm have hit an obstacle in the form of a rare bird. That's coming up next in our "City of Tomorrow."

(COMMERCIAL BREAK)

BLITZER: London has become a showcase of alternative sources of electricity to decrease dependence on fossil fuels. But the London array wind turbines have run into a small obstacle.

Rachel Crane has the story in today's "City of Tomorrow."

(BEGIN VIDEOTAPE)

RACHEL CRANE, CNN CORRESPONDENT (voice-over): This is the London array. It's the world's largest offshore wind farm. And this is what it helps power.

The farm has 175 giant wind turbines, capable of generating enough electricity to power half a million homes. And it's quite possibly the answer to London's growing energy needs.

UNIDENTIFIED MALE: We expect about 900,000 tons of carbon dioxide to be saved a year that would have otherwise be put into the atmosphere. The equivalent of 300,000 cars a year taken off the road.

CRANE: Approximately 8.3 million people live here. And by 2031, that number is expected to climb to 10 million. A growing population means a growing need for energy. London, one of the most historic cities in the world, knows that in order to keep up with future energy demands, they need to update and diversify their energy portfolio.

UNIDENTIFIED MALE: It's really about, how do we get to a cleaner future, reliable energy source? And that's really what the London array is about, is moving from that old coal, gas, nuclear to more renewable and offshore winds.

CRANE: The U.K. is one of the world's leaders in offshore wind power. There are over 1,000 turbines dotting the waters. These things are massive. Each turbine is larger than the London Eye. And it takes as little as a 10-mile-an-hour gust to spin these. Until recently, the array was set to expand by possibly 57 more

turbines, but construction was halted to save a rare breed of bird, called the red-throated diver.

UNIDENTIFIED MALE: There are a species of birds in the U.K., and come down in the winter and they feed there.

CRANE: The fear is the construction of the second phase would displace the birds.

(on camera): Is that a business of a disappointment that it's not in the near future for you?

UNIDENTIFIED MALE: I think, as an engineer, I always want to build things. So, of course, I would like things to go ahead. Having said that, you've got to be realistic.

I work with offshore wind because I care about the environment.

CRANE (voice-over): The future will present more obstacles than a bird. But one thing is certain. More of these, means more of this.

(END VIDEOTAPE)

BLITZER: That's it for me. Thanks very much for watching. I'm Wolf Blitzer in Jerusalem. I'll be back 5:00 p.m. eastern, a special two hour "The Situation Room," a special report on what's going on here in the Middle East. That's coming up 5:00 p.m. eastern.

NEWSROOM with Don Lemon starts right now.